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Prices may remain under pressure in Q2: ICRA

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Despite cement prices touching a record level by end-June 2018, they could not sustain these high levels and eased by end-July. ET Index of Cement Prices has fallen about 77 points or 3.77 per cent from 2048 points at end-June to 1970.9 points at end-July 2018, though it has remained at 2011.2-point level till a few days before that. The companies could not hold their prices at a higher level witnessed in end-June 2018 even though their costs have spiked during the last few months. The expectations that the prices will go up further in July was dashed as major players in the industry were focusing more on building volumes by pushing stocks instead of focusing on higher profitability at this juncture.
On an average, cement prices have declined in most markets in April-June 2018 (Q1 FY2019) on a year-on-year (YoY) basis, at a pan India level prices have declined by around 5-6 per cent YoY. Leading rating agency ICRA said in a recent analysis that due to decline in cement prices the profitability of cement companies is likely to be negatively impacted in the first half of FY2019.
‘Also, the prices are likely to remain under pressure in Q2 FY2019 due to the monsoons. Higher power and fuel (increase in coal and pet coke prices) and freight costs (increase in diesel prices) in the near term are likely to continue to put pressure on the profitability margins and debt metrics of the cement companies,’ says Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA.
The demand momentum is healthy, but the rising supplies have not resulted in a significant increase in the cement prices, which remained flat in Q1 FY2019 on a Q-o-Q basis, Majumdar adds.
According to data available with ICRA, in Q1 FY2019, cement prices declined in most markets such as Delhi, Chandigarh, Kolkata and Hyderabad. However, prices in Ahmedabad have been higher by 2.8 per cent on a YoY basis. In Delhi and Hyderabad, they have been lower by Rs. 40/bag, around 12-13 per cent, and in Chandigarh by Rs. 20/bag YoY (5.7 per cent). On the input cost front, coal and pet coke prices in Q1 FY2019 are higher by 21 per cent and 30 per cent on a YoY basis, resulting in higher power and fuel costs. Diesel prices have also been higher by 21 per cent YoY, resulting in higher freight costs.
Monthly production remained in the range of 26?28.5 million MT during the December 2017-May 2018 period, clocking the highest at 28.5 million MT in March 2018. In April 2018, production continued to remain healthy at 27.3 million MT, an increase of 16.7 per cent on a YoY basis. While production declined on a MoM basis by 5.0 per cent in May 2018, it has been higher by 5.2 per cent on a YoY basis at around 26 million MT. The production in the aforementioned period was supported by the demand in Andhra Pradesh and Telangana (driven by irrigation, low cost housing and infrastructure projects), the eastern (driven by low cost housing and infrastructure demand) and the western Indian markets (led by execution of infrastructure projects). Unavailability of sand continued to impact demand in Rajasthan.
However, during their Q1 2019 results announcement quarter, the management of UltraTech Cement was sanguine about the rise in prices in the coming quarter, citing that June exit prices were higher than the quarter’s average.BS Srinivasalu Reddy

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Concrete

Holcim UK drives sustainable construction

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Holcim UK has released a report titled ‘Making Sustainable Construction a Reality,’ outlining its five-fold commitment to a greener future. The company aims to focus on decarbonisation, circular economy principles, smarter building methods, community engagement, and integrating nature. Based on a survey of 2,000 people, only 41 per cent felt urban spaces in the UK are sustainably built. A significant majority (82 per cent) advocated for more green spaces, 69 per cent called for government leadership in sustainability, and 54 per cent saw businesses as key players. Additionally, 80 per cent of respondents stressed the need for greater transparency from companies regarding their environmental practices.

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Concrete

GCCA releases LCR system

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The Global Cement and Concrete Association (GCCA) has launched the Low Carbon Ratings (LCR) system for cement and concrete, a new global rating based on products’ carbon footprints. The system uses a clear AA to G scale to help customers prioritise sustainability in material selection across construction sectors worldwide. The GCCA says that the LCR system is designed to be easily recognisable, with a simple visual graphic that indicates a product’s rating and provides consistency and comparability to other products.

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Concrete

FLSmidth opens eco-friendly plant in Casablanca

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FLSmidth has inaugurated a €21 million mill liner manufacturing plant in Casablanca, covering 11,250m² with a production capacity of 6,500 tonnes annually. The LEED-certified facility significantly reduces carbon emissions by up to 56 per cent and fully recycles water used in the manufacturing process. Up to 250 jobs will be created in the Valparaíso region. Mikko Keto, CEO, highlighted the plant as a symbol of FLSmidth’s commitment to sustainable mining and community engagement in South America. Earlier in 2024, the Denmark-based company announced plans to sell its cement division to sharpen its focus on mining operations.

 

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